COMPARISON | The most cost-effective short-term credit

[Foxhound5366]

I'm sharing this in case it helps anybody else select an effective form of short-term credit for their personal needs

So for a while now I've been wondering which of my short-term debts are most cost-effective, and the relative merits of consolidating the debts into one or the other.

This morning I decided to do a detailed analysis, and the results are pretty interesting.

I'm not 100% confident in my calculations here, so if you spot an error please flag it

SHORT-TERM DEBT OVERVIEW [CLICK HERE TO VIEW LARGE IMAGE]
NB: Do not get hung up on the monthly minimum payments or total amounts of debt ... these are just relative. The real insights are in the effective annual interest rates of each, and the last two rows.



SOME CONCLUSIONS
- Standard Bank splits its interest into 'Interest Charged' and 'Cash Finance Charge' (effective interest is these two added together)
- Standard Bank's Credit Card has a significantly higher Effective Annual Interest Rate compared to its Nominal/Stated rate (partly due to my Credit Protection Policy there). Although FNB's Effective rate is also slightly higher, it is overall the cheapest form of credit I currently have.
- FNB's minimum monthly installment seeks to ensure that around 70% of the payment services the debt (far higher than rest)
- If I was to consolidate all my debt on my FNB credit card, I'd pay 70% MORE monthly as a minimum monthly installment, but 241% MORE of that money would go towards paying off my actual debt (rather than just interest) than currently.
- 70% of my Standard Bank Credit Card payment goes towards just paying for the cost of credit, while only 30% of my FNB minimum installment is used for the same thing.

 

[jman]

Why do you have so much short term debt in the first place?

 

[backstreetboy]

Why do you have so much short term debt in the first place?

Blame the cANCer?

 

[Foxhound5366]

Why do you have so much short term debt in the first place?

Lol jman, point missed huh? Go sit on the park bench and consider your toes.

 

[jman]

You need to take a seat on that bench next to me and think about why you're taking out loads of short term debt. Over 100k? Crazy.

 

[Foxhound5366]

You need to take a seat on that bench next to me and think about why you're taking out loads of short term debt. Over 100k? Crazy.

Jman, are you always a judgemental prick, or just on Saturdays?

 

[jman]

Jman, are you always a judgemental prick, or just on Saturdays?

I'm asking you a serious question. You're the one who got all touchy.

In all seriousness, it seems like you're a bit reckless when it comes to debt.

 

[Foxhound5366]

I'm asking you a serious question. You're the one who got all touchy.

In all seriousness, it seems like you're a bit reckless when it comes to debt.

In all seriousness, you seem like a terrible person who thinks your opinion is needed.

 

[Willy Strong]

You posted publicly and a user asked a simple question.

Chill... We're judging your avatar.

/post a thread on a forum, doesn't know what forums are... Insults.

 

[biometrics]

You posted publicly and a user asked a simple question.

Chill... We're judging your avatar.

/post a thread on a forum, doesn't know what forums are... Insults.

Interestingly most of the threads he starts ends up in drama.

 

[AstroTurf]

You posted publicly and a user asked a simple question.

Chill... We're judging your avatar.

/post a thread on a forum, doesn't know what forums are... Insults.

mybroadband has a group of cliche cheerleader forumites recently, it's all insults. Cant have reality where **** happens /duh.



Anyway, I don't bank with either but found the discussion amusing. I hope Kevin or similar do a bit more in depth research.

 

[Foxhound5366]

You posted publicly and a user asked a simple question.

Chill... We're judging your avatar.

/post a thread on a forum, doesn't know what forums are... Insults.

lol simm, I know what some people use the internet for, but it doesn't mean I need to tolerate or support it. If dear jman thinks that the correct social response to somebody posting a financial guide with insights backed up by data to help some other people is a personal judgement, then he deserves everything he gets and more. I'm tired of judgemental *******s who are quick to crticise while unwilling (or unable) to contribute anything of value.

 

[jman]

lol simm, I know what some people use the internet for, but it doesn't mean I need to tolerate or support it. If dear jman thinks that the correct social response to somebody posting a financial guide with insights backed up by data to help some other people is a personal judgement, then he deserves everything he gets and more. I'm tired of judgemental *******s who are quick to crticise while unwilling (or unable) to contribute anything of value.

Lol so dramatic. If you think someone asking why you have over 100k debt in the first place is not "of value", then I don't know.. I'm not judging you, I'm asking you a question.

Anyway, good luck to you

 

[Foxhound5366]

Lol so dramatic. If you think someone asking why you have over 100k debt in the first place is not "of value", then I don't know.. I'm not judging you, I'm asking you a question.

Anyway, good luck to you

Dude, be a man enough to own up to your own negativity, ok? You phrased your question using 'so much', and then elaborated it with this: "In all seriousness, it seems like you're a bit reckless when it comes to debt."

How is that 'I'm not judging you'? LOL

You DID judge me, you've got no idea who I am or what the source of that debt is, or my affordability of it. You also didn't engage at all with my original post, and all the data and insights I'd shared ... instead you reached a conclusion about me and then decided to challenge me about it, bringing your tiny worldview into a thread that didn't want it or need it. Where was the 'value' there?

 

[Drifter]

Interesting.....

 

[f2wohf]

You need to take a seat on that bench next to me and think about why you're taking out loads of short term debt. Over 100k? Crazy.

It all depends on your level of income.

100k of credit cards on a 100k income is nothing shocking.

100k on 20k is.

 

[jman]

It all depends on your level of income.

100k of credit cards on a 100k income is nothing shocking.

100k on 20k is.

Even still, seems silly to be paying that premium for credit. If you're earning 100k, in my mind you should be able to save up for whatever it is you wanted. We have a credit problem in this country.

 

[f2wohf]

Even still, seems silly to be paying that premium for credit. If you're earning 100k, in my mind you should be able to save up for whatever it is you wanted. We have a credit problem in this country.

I have 1.5x times my salary in credit cards that I use.

I have a reserve credit cards for emergencies at 1x my salary on top that I don't use.

The 1.5x times, I use part of it as free cash and repay it before the 55 days while my actual cash bears interests in the meanwhile. The other part is used for professional expenses that I have to advance sometimes and for which I'm repaid at the end of the month.

 

[jman]

I have 1.5x times my salary in credit cards that I use.

I have a reserve credit cards for emergencies at 1x my salary on top that I don't use.

The 1.5x times, I use part of it as free cash and repay it before the 55 days while my actual cash bears interests in the meanwhile. The other part is used for professional expenses that I have to advance sometimes and for which I'm repaid at the end of the month.

If you have the discipline to use credit wisely, such as using the 55 day interest period to your advantage, having it as a form of emergency funds, etc is great. I do the same. Mainly for ebucks purposes. But have never actually incurred interest charges.

Doesn't seem the OP is in the same boat - looking at overdrafts, credit cards, monthly premiums on each and comparing each rate. I know I didn't take the conversation to where he wanted it to go, but seriously, paying an extra 20% on stuff (compounding if you keep it running) doesn't make sense to me.